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You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and
You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. You thought interest rates would be either 4% with 50% probability or 6% today. What was your standard deviation of your expected return?
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